Nielsen India sees FMCG growing at 12-13% in October-December period

Nielsen India sees the FMCG industry growing 12-13 percent in the fourth quarter of CY18. The rationale behind the double-digit growth forecast is strengthening GDP, boost to rural income and a controlled inflation rate.

In Q3 CY18, the sector grew 16 percent, of which volumes accounted for 13 percentage points and the remaining by price changes.

The research agency has maintained its CY18 growth estimate at about 13 percent, a tad lower than CY17 growth of 14.1 percent.

According to Nielsen India, the challenges for the FMCG industry in Q3 were a weaker rupee, high crude oil prices, Kerala floods and plastic ban.

Nielsen India incorporated e-commerce sales in the retail index starting July. Contribution from the e-commerce channel to India FMCG sales currently stands at just over a percent and has grown over 101 percent since last year in specific product categories.

It expects contribution of e-commerce to total FMCG sales to rise from 11 percent to 30 percent by CY30.

"In the next 12 years, we expect e-commerce to contribute 11 percent of FMCG sales, a growth of 8 times from current levels,” said Sameer Shukla, Executive Director, Retail Measurement Services, South Asia, Nielsen India.

e-commerce contributed 0.4 percent to FMCG sales in CY16 and CY18 and is expected to be around 1.3 percent of branded packaged FMCG sales.

The research firm highlighted the fast sales upsurge in modern trade channels in India and rise of the small 'Goliaths', essentially the small and regional players at the other end of the spectrum, as two big growth drivers.

Growth in modern trade sales, including brick and mortar retail banners, standalone modern trade outlets and e-commerce have increased substantially during the last few years, with multiple changes in trade and policy environment. Banners are stores such as Easyday, Apollo, Medplus, D-Mart and Big Bazaar.

Modern trade has grown two times over the last few years from one-third of traditional trade in 2015.

Between Q3 CY16 to Q3 CY18, traditional trade grew at two percent and the same for modern trade was 23 percent.

Growth in modern trade has been classified as 18 percent from metros, 32 percent from 5-10 lakh towns, 33 percent from 1-5 lakh towns and 58 percent from less than 1 lakh towns.

The market research firm also noted that the FMCG companies in the top 50 contributed 60 percent in value terms. However, smaller manufacturers are driving this growth.

It also said that companies in the top 101 to 300 bracket contributed 11 percent in terms of value and grew 12.8 percent. For tail-end companies beyond the top 300, the contribution was 21 percent and growth 18.5 percent.

Regional players are growing at a faster clip (27.7 percent) compared to national players (11.7 per cent), it stated.

(With inputs from PTI)